Monday 18/03/24

  1. In MACRO NEWS, Putin wins, Wilders is in a pickle and the Bank of England is likely to keep rates unchanged
  2. In BUSINESS TRENDS NEWS, recession fears recede, pubs and bars close and ITV announces more cuts
  3. In CAR NEWS, CATL posts solid earnings while Honda and Nissan announce an EV tie-up
  4. In MISCELLANEOUS NEWS, UK house prices rise, Nespresso aims to roll out cafés, Knoops targets expansion and Voicify is in hot water
  5. AND FINALLY, I bring you a potentially problematic strongman event…

1

MACRO NEWS

So Putin wins, Wilders falters and the Bank of England will probably sit on its hands…

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Vladimir Putin cruises to Russian election victory (Financial Times, Max Seddon, Anastasia Stognei and Polina Ivanova) is possibly one of the most unsurprising headlines you’ll ever read, but Vlad is just about to cement another six years in power. Preliminary results show that he’s on course to be re-elected by 87% of the vote in a 70% voter turnout. Inevitable when you consider that the Kremlin banned all criticism of Putin or the war and stopped opposition candidates from running. More of the same…

Meanwhile, Geert Wilders setback spells trouble for Europe’s far right (Financial Times, Andy Bounds, Leila Abboud and Amy Kazmin) shows that, following his victory in last year’s elections, the Dutch far right leader has actually found the going far tougher since then as he has failed to form a government. Centrist parties have closed ranks to shut him out and have said that his Freedom party must concede the premiership as a condition of them

forming a government, showing that (weirdly!) winning votes doesn’t always mean winning power. Something similar is going on in Portugal where the biggest mainstream parties are looking to put aside their own differences in order to shut out far-right party Chega from joining a ruling coalition. * SO WHAT? * As things stand, both Wilders’ Freedom Party and Chega could be part of one of the biggest groupings in the European parliament elections in June, Identity and Democracy (ID), which is itself dominated by Marine Le Pen’s Rassemblement National (RN). Then of course there is Italy’s Meloni-led ECR to throw in the mix. I do wonder how long the extreme right-wing parties can be shut out given that they have the platform that they have because of VOTERS. Now I am not for one minute saying that I support what these parties say, but the fact that this swing to the right across Europe isn’t some isolated phenomenon in a country that no-one cares about should set alarm bells ringing in Brussels that need to be heeded across the whole bloc. Mainstream parties will probably hope that the far-right parties will implode as many of them are quite divided (and presumably don’t have tons of experience with actually being in power in some cases).

Back home, Bank of England set to hold interest rates as it awaits more signs on inflation (Financial Times, Sam Fleming) highlights the decision on interest rates that’s going to be made this week and that markets expect them to stay as they are. It wants to see clearer signs that pay growth and services inflation are slowing down sufficiently before it starts to cut interest rates. If it kept them unchanged, it would be the fifth meeting in a row of keeping them steady after a period where we saw 14 consecutive increases.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

2

BUSINESS TRENDS NEWS

Recession fears ease, hospitality takes a pasting and ITV makes more cuts…

Recession fears ease despite shipping disruption (The Times, Mehreen Khan) cites the latest monthly economic tracker from Lloyds Bank which shows that economic growth has broadened across the UK’s private sector to hit a ten-month high in February, which seems to coincide with what we saw in ONS data last week. Ten out of 14 sectors saw a rise in output last month (the best level seen since April 2023) versus eight in January. Software and financial services were the best-performing sectors of the economy, but the main comfort we can draw from this data is that the services sector is doing well – which is important given that it accounts for about 75% of the UK’s GDP!

On the flipside of this, Red Sea attacks cause 90 day waits for parts (Daily Telegraph, Daniel Woolfson) shows that although our all-important services sector is thriving, manufacturing is having a harder time as Make UK (the manufacturing trade association) says that factories are experiencing massive lead times as a result of what’s going on in the Red Sea at the moment. Also, Pub and bar closures at decade high (Daily Telegraph, James Warrington) cites stats from the Insolvency Service which show that some areas of the services sector have been suffering badly.

769 pubs and bars entered insolvency last year – a near-50% rise on 2022’s level, which was the previous decade high. Separately, a survey by the Federation of Small Businesses said that one in eight hospitality businesses expects to close in the next year, which is about four times the average rate across all sectors. * SO WHAT? * It’s good to hear that the services sector is doing well despite geopolitical tensions and other headwinds – but I suspect that until inflation falls meaningfully, interest rates drop to lower levels and people at all levels of the socio-economic scale feel more confident, hospitality is going to continue to suffer.

Then in ITV cuts jobs amid sharp slump in advertising revenues (Daily Telegraph, James Warrington) we see that ITV has started to cut jobs in its in-house advertising agency, ITV Creative, last month as it responds to the biggest advertising downturn since the financial crisis. ITV saw an 8% drop in advertising revenues last year as customers cut advertising spend but things were particularly bad in its traditional TV business, although some of this was mitigated by growth in its ITVX streaming division. * SO WHAT? * This is clearly bad but I guess it is to be expected. What we should now be waiting for is when ITV says that things are showing signs of turning around. I wonder whether we’ll see this in the next six months if improving business and consumer sentiment starts filtering through to ACTUAL corporate spending. As I keep saying, advertising spend is often seen as a leading indicator of the economy.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

3

CAR NEWS

CATL booms while Toyota and Honda announce joint efforts on EVs…

CATL Shares Rise Sharply on Robust Earnings, Special Dividend (Wall Street Journal, Jiahui Huang) highlights a strong performance by the Chinese EV battery giant as it reported strong 2023 earnings and announced a surprise special dividend. * SO WHAT? * The company benefited from falling raw material costs last year and the special dividend shows that it is confident about its finances! Given that it is China’s biggest EV battery maker – with a market share of 53% – you can see why it is feeling pretty confident!

Then in Nissan, Honda Shares Rise Sharply After EV Tie-Up Plan (Wall Street Journal, Kosaku Narioka) we see that two Japanese automotive giants have decided to work together on EVs in an effort to challenge Chinese and American rivals. Early initiatives include the joint procurement of and development of components including batteries. * SO WHAT? * Japanese automakers have lagged established rivals in EVs so an alliance like this makes a lot of sense in order to accelerate development and keep costs as low as reasonably possible. This isn’t the first such alliance – and I doubt it’ll be the last!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

4

MISCELLANEOUS NEWS

UK house prices rise, Nespresso and Knoops aim for expansion while Voicify gets in trouble…

In a quick scoot around some of today’s other interesting stories, UK house prices rise by 1.5% in biggest increase for 10 months (The Guardian, Miles Brignall) cites the latest figures from Rightmove which show that the UK residential property market is picking up after a “muted 2023”. The online property website said that March’s 1.5% figure is noticeably higher than the historical March average of 1% and it is the biggest one-month rise for 10 months and it said that estate agents were seeing a meaningful increase in buyer demand. It sounds like the property market has bottomed out!

There’s good news for beverage fans in Nespresso wakes up to UK coffee boom with its first café (The Times, Isabella Fish) as the coffee capsule brand is going to open its first on-the-go “Nespresso bar” in Old Broad Street, near Liverpool Street Station in London. This will be the first of its type in Europe, but the Nestlé-owned subsidiary will obviously aim to roll out the concept across Europe if it proves to be popular. Fun fact: coffee officially overtook tea as the nation’s favourite drink last year! Then in Hot chocolate brand Knoops warms up for rapid expansion (The Times, Dominic Walsh) we see that a major roll-out is on the cards for this hot chocolate brand with 40 by this time next year, eventually rising to up to 300 across Britain. It already has designs on international expansion – having secured a partner in the Middle East – and it is in discussions in the US and China. * SO WHAT? * I am doubtful about the Nespresso thing. I like the pods and everything, but given the intense competition out there I just can’t see why you’d want to go there rather than any of the other

options. There is then this feeling of paying four quid (or whatever) for a coffee that you COULD have made yourself for pennies (for instance, a “tube” of Volluto coffee pods from the Nespresso website work out at £0.39 per pod). Yes, we all know that paying a few quid for some hot water run through some beans represents a massive mark-up but the fact that Nespresso has been built on making coffee at home makes it more of a leap to buy “outside” IMO. We’ll see, but I am sceptical. On the other hand, I think Knoops is a BRILLIANT idea. I used to think “but it’s only a hot chocolate – how good could it actually be?”, but then I went to one where I live which opened at the end of last year. Oh. My. God. The answer to the question I just mentioned is “Pretty ****ing good!”. The amount of choice is absolutely ridiculous and it really is quite stunning. AT THE MOMENT, there IS no competition. However, I would have thought that the barriers to entry are pretty low – and what about someone like Hotel Chocolat (or Nestlé!) deciding they want to do something similar?!? Knoops is brilliant and it is the only one in the sand box at the moment. However, if it really starts to take off, don’t expect that to last too long…

Then in ‘Deepfake’ music start-up Voicify in copyright row (The Times, Helen Cahill) we see that the UK music industry is launching a lawsuit against AI “deepfake” tech company Voicify that produces songs imitating the voices of signers such as Amy Winehouse, Rihanna and Drake. The BPI is accusing Voicify of breaching copyright by allegedly using copyrighted works to create the tech that replicates artists’ voices. Voicify operates online as Jammable. I think that this is going to be watched very closely by all sorts of creative industries as an example of things to come!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

5

...AND FINALLY...

…in other news…

So here’s a video of strongman Eddie Hall doing something that looks monstrously hard, but it’s not the weight that he’s holding that I’m thinking of when I watch this – it’s the potentially painful consequences for his ⚽⚽ at the end 🤣! That handle could do quite a lot of damage 😨. Apologies on his behalf for the swearing…

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Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)